IN TER N ATIO N A L

M A R K ETIN G

International m arketing
It refers to marketing carried out by

companies overseas or across national

borderlines.
The performance of the business
activities that direct the flow of a
companys goods and services to
consumers or users in more than one
nation for a profit.

IN TER N ATIO N A L
M
A
R
K
ETI
N
G
In simple words International

Marketing is the application of

marketing principles across national
boundaries.
However, there is a crossover between
what is commonly expressed as
international marketing and global
marketing, which is a similar term.
Global marketing refers to marketing
activities integrated across multiple
country markets

International M arketing V s.
D om estic M arketing
The main difference between them is

that the marketing activities take

place in more than one country.
more complicated, at least two levels
of uncontrollable uncertainty instead
of one.

InternationalM arketing V s. D om estic

M arketing

Uncertainty is created by the

uncontrollable elements of all business

environments, but each foreign country
in which a company operates adds its
own unique set of uncontrollable.

InternationalM arketing V s. D om estic

M arketing

Competition, legal restraints,

government controls, weather, fickle

consumers, and any number of other
uncontrollable elements can, and
frequently do, affect the profitable
outcome of good, sound marketing
plans.

InternationalM arketing V s. D om estic

M arketing

Marketer can not control or influence

these uncontrollable elements, but

instead must adjust or adapt to them
in a manner consistent with a
successful outcome.

InternationalM arketing V s. D om estic

M arketing

Marketing objectives are achieved in

a way that mold the controllable

elements of marketing decisions
(product, price, promotion and
distribution) within the framework of
the uncontrollable elements of
marketplace (competition, politics,
laws, consumer behavior, level of
technology, and distribution).

Source: Philip R. Cateora. International Marketing.

Philip R. Ninth
Cateora.
edition
International
ational Marketing. Ninth edition

InternationalM arketing Environm ent

Foreign environment
Political/legal
forces

Cultural
forces

Political
/ legal
forces

Geography and
infrastructure

(uncontrollable)
Domestic environment
(uncontrollable)

(controllables)

Economic
climate
Structure of
distribution
Environmental
uncontrollables
country market A

Economic forces

Competitive
Competitive
structure
forces

Level of
technology

Internationalenvironm entalforces
Marketing controllables: The successful manager

constructs a marketing program designed for

optimal adjustment to the uncertainty of the
business climate.
Domestic uncontrollables: This includes homecountry elements that can have a direct effect on
the success of a foreign venture: political forces,
legal structure, and economic climate.
Foreign uncontrollable: The problem of
uncertainty is further complicated by a frequently
imposed alien status that increases the difficulty
of properly assessing and forecasting the dynamic
international business climate.

Internationalenvironm entalforces
Thus a strategy successful in one

country can be rendered ineffective

in another by differences in political
climate, stage of economic
development, level of technology, or
other cultural variation.

International m arketing
International marketing is often not

as simple as marketing your product

to more than one nation. Companies
must consider
language barriers,
ideals, and
customs in the market they are

approaching.

Language barrier
Due to a language barrier, it is more

difficult to obtain and interpret research

data in international marketing.
Promotional messages need to consider
numerous cultural differences between
different countries.
This includes the differences in
languages, expressions, habits,
gestures, ideologies and more.

Language barrier
United States - "okay"
Mediterranean - "zero" or

"the worst
Tunisia - "I'll kill you"
Japan - "money".

Language barrier
74 English-speaking nations a word with the same
meaning can differ greatly from each other
Bar: pub (Britain), hotel (Australia), boozer

(Australia, Britain, New Zealand)

Bathroom: Loo (Britain), Dunny (Australia)
Ghost or monster: Wendigo (Canada), Duppy
(Caribbean), Taniwha (New Zealand)
Truck: Lorry (Britain and Australia)
Sweater: Jumper (England)
French fries: Chips (Britain)
Soccer: Football (the rest of the world)

Language barrier: M isinterpretation

On a sign in a Bucharest hotel lobby:
The lift is being fixed for the next day.

During that time, we regret that you will

be unbearable.

From a Japanese information booklet

about using a hotel air conditioner:

Cooles and Heates: If you want just

condition of warming your room, please

control yourself.

SR C A nd Ethnocentrism : M ajor O bstacles

SRC- Self-reference criterion

The key to successful international

marketing is all about adaptation to

the environmental differences
between markets.

SR C A nd Ethnocentrism : M ajor O bstacles

An unconscious reference to ones

own cultural values, experiences,

and knowledge as a basis for
decisions.
SRC impedes the ability to assess a
foreign market in its true light.

SR C A nd Ethnocentrism : M ajor O bstacles

Cross-cultural analysis isolating the SRC

influences
Define the business problem or goal in homecountry cultural traits, habits, or norms.
Define the business problem or goal in foreigncountry cultural traits, habits, or norms. Make no
value judgments.
Isolate the SRC influence in the problem and
examine it carefully to see how it complicates the
problem.
Redefine the problem without the SRC influence
and solve for the optimum business goal situation.

Stages O f InternationalM arketing

Involvem ent

1. No Direct Foreign Marketing: trading

companies, foreign customers, domestic

wholesalers, distributors
2. Infrequent Foreign Marketing:
Temporary surpluses caused by variations
in production levels or demand, few
companies today fit this model
3. Regular Foreign Marketing: foreign or
domestic overseas intermediaries, own
sales force or sales subsidiaries

Stages O f InternationalM arketing

Involvem ent
4. International Marketing: fully

committed and involved in

international marketing activities. Such
companies seek markets all over the
world and sell products that are a
result of planned production for
markets in various countries.
5. Global Marketing: Market
segmentation decisions are no longer
focused on national borders. Instead,
market segments are defined by

The M arketing Environm ent

The marketing environment consists of all

factors external to an organization that can

affect the organizations marketing activities.

Identifying M arket O pportunities and Threats

Many firms use environmental scanning to identify

important trends and determine whether they represent

present or future market opportunities or threats.

The SocialEnvironm ent

The social environment includes all factors

and trends related to groups of people,

including their number, characteristics,
behavior, and growth projections.
Number of
People

Growth
Projection

Social
Environment
Behavior

Characteristics

The D em ographic
Environm ent
The demographic environment refers to

the size, distribution, and growth rate of

groups of people with different characteristics.
The demographic characteristics of interest to
marketers relate in some way to purchasing
behavior, because people from different
countries, cultures, age groups, or household
arrangements often exhibit different
purchasing behaviors.
A global perspective requires that marketers
be familiar with important demographic trends
around the world as well as within the hoe
country.

Population Estim ate Year

2025

D em ographic Trends
World and country population statistics are

important, but most marketers target subgroups.

Trends in population subgroups are typically the
most useful to marketers, for example, the
growth of the urban population.

D em ographic Trends
Another interesting trend is the aging of the

population.
The aging of the population is especially evident
in Italy, Japan, Britain, and the United States.

The CulturalEnvironm ent

The cultural environment refers to factors and

trends related to how people live and behave.

Values

Subgroup
Activities

Beliefs

Ideas

Cultural
Factors
Attitudes

CulturalD iversity
Cultural differences are important in both

international and domestic markets.

Much of the population and buying power growth in
the United States is and will be from multicultural
groups.

Changing Roles
As more women enter the workforce and

household compositions change, typical

household roles are altered.
Tremendous market opportunities exist for
firms that can develop effective strategies
for appealing to these changing roles.

Em phasis on H ealth & Fitness

The pursuit of a more healthful

lifestyle includes:
eating more nutritious foods
exercising regularly
participating in various sports activities
focusing on wellness.

This translates into potential market

opportunities for firms that provide

products and services geared toward
improving health and fitness.

The D esire for Convenience

Increased desire for convenience

created by:
Changes in household composition
Increases in the number of working

women
General shortage of time

Consum erism
Consumerism is the movement to establish

and protect the rights of buyers.

One increasingly important consumer issue
is environmentalism.
Successful marketers can respond by
developing environmentally safe products
and communicating their environmental
contributions.

The Econom ic Environm ent

The economic environment includes

factors and trends related to income levels

and the production of goods and services.
Economic trends in different parts of the
world can affect marketing activities in
other parts of the world.
The gross domestic product (GDP)
represents the total size of a countrys
economy measured in the amount of
goods and services produced.

The Political/LegalEnvironm ent

The political/legal environment encompasses

factors and trends related to governmental

activities and specific laws and regulations that
affect marketing practice.
Global
Trends

Political
Legal
Environment
Regulation

Legislation

G lobalPoliticalTrends
In todays world economy, international

political events greatly affect marketing

activities. For example the impact of the
war on terrorism on the travel and
security industries.
A second important political trend is
movement toward free trade and away
from protectionism. Studies show that
countries with the freest trade have the
highest GDP growth.

Legislation

Regulations and Regulatory Agencies

Most legislation in the United States is

enforced through regulations developed by

a variety of agencies, and marketers must
often work with regulatory authorities at
the federal, state, and local levels.

The TechnologicalEnvironm ent

The technological environment

includes factors and trends related to

innovations that affect the
development of new products or the
marketing process.
These technological trends can
provide opportunities for new product
development, affect how marketing
activities are performed, or both.

The Com petitive Environm ent

The competitive environment

consists of all the organizations that

attempt to serve similar customers.
Brand Competitors

Product
Competitors

The most direct competition, offering the

same types of products as competing firms.
For example, Nike is a brand competitor of
Reebok as both companies manufacture
shoes.
Offer different types of products to satisfy
the same general need. Dominos Pizza,
McDonalds, and Kentucky Fried Chicken
are product competitors.

The InstitutionalEnvironm ent

The institutional environment

consists of all the organizations involved

in marketing products and services.

Market
Research Firms

Retailers

Advertising

Suppliers

Wholesalers

Customers

The W orld Econom y An

O verview
The new realities:
Capital movements have replaced trade

as the driving force of the world

economy
Production has become uncoupled from
employment
The world economy, not individual
countries, is the dominating factor

243

The W orld Econom y An

O verview
The new realities continued:
75-year struggle between capitalism and

socialism has almost ended

E-Commerce diminishes the importance
of national barriers and forces
companies to re-evaluate business
models

244

Econom ic System s
4 main types of economic

systems
Market Capitalism
Centrally planned socialism
Centrally planned capitalism
Market socialism

245

Econom ic System s
Resource Allocation
Market
Private
Resource
Ownershi
p
State

Command

Market
Capitalism

Centrally
Planned
Capitalism

Market
Socialism

Centrally
Planned
Socialism
246

Econom ic Freedom
Rankings of economic freedom among

countries
Ranges from free to repressed

Variables considered include such

things as:
Trade policy
Taxation policy
Banking policy
Wage and price controls
Property rights

247

Econom ic Freedom
Free

Hong Kong
Singapore
Ireland
New Zealand
United States
United Kingdom
Netherlands
Australia
Switzerland

Repressed

Bosnia
Vietnam
Laos
Iran
Cuba
Iraq
Libya
North Korea
Congo
248

Stages ofM arket D evelopm ent

World Bank has defined four

categories of development
High-income countries
Upper-middle income countries
Lower-middle income countries
Low-income countries

Based upon Gross National Product

(GNP)
249

Stages ofM arket D evelopm ent

250

Big Em erging M arkets

China
India
Indonesia
South Korea
Brazil
Mexico
Argentina
South Africa
Poland
Turkey
2-51

M arketing O pportunities in
LD Cs
Characterized by a shortage of goods

and services
Long-term opportunities must be
nurtured in these countries

Look beyond per capita GNP

Consider the LDCs collectively rather

than individually
Consider first mover advantage
Set realistic Deadlines

252

Infl
uencing the W orld Econom y
Group of Seven (G-7)
Organization for Economic

Cooperation and Development

The Triad

253

Balance ofPaym ents

Record of all economic transactions

between the residents of a country

and the rest of the world

Current account record of all recurring

trade in merchandise and services,

private gifts, and public aid between
countries

trade deficit
trade surplus

Capital account record of all long-term

direct investment, portfolio investment,

and capital flows

254

O verview ofInternational
Finance
Foreign exchange makes it possible

to do business across the boundary

of a national currency
Currency of various countries are
traded for both immediate (spot) and
future (forward) delivery
Increases the risk to organizations
that are involved in global marketing

255

M anaged D irty Float?

Definitions
Float refers to the system of fluctuating

exchange rates
Managed refers to the specific use of
fiscal and monetary policy by
governments to influence exchange
rates
Devaluation is a reduction in the value of
the local currency against other currencies

256

M anaged D irty Float?

Definitions
Dirty refers to the fact that central

banks, as well as currency traders, buy

and sell currency to influence exchange
rates

257

Foreign Exchange M arket

D ynam ics
Supply and Demand interaction
Country sells more goods/services than

it buys
There is a greater demand for the
currency
The currency will appreciate in value

258

Purchasing Pow er Parity (PPP)

The Big M ac Index

Is a certain currency over/under- valued

compared to another?
Assumption is that the Big Mac in any
country should equal the price of the
Big Mac in the US after being converted
to a dollar price
2-59

M anaging Econom ic Exposure

Economic exposure refers to the

impact of currency fluctuations on

the present value of the companys
future cash flows
Transaction exposure is from

sales/purchases
Real operating exposure arises when
currency fluctuations, together with
price changes, alter a companys future
revenues and costs
260

M anaging Econom ic Exposure

Numerous techniques and strategies

have been developed to reduce

exchange rate risk
Hedging involves balancing the risk of

loss in one currency with a

corresponding gain in another currency
Forward Contracts set the price of the
exchange rate at some point in the
future to eliminate some risk
261

M arket Capitalism
Individuals and firms allocate

resources
Production resources are privately
owned
Driven by consumers
Government should promote
competition among firms and ensure
consumer protection
262

Centrally Planned Socialism

Opposite of market capitalism
State holds broad powers to serve the

public interest; decides what goods and

services are produced and in what
quantities
Consumers can spend on what is
available
Government owns entire industries
Demand typically exceeds supply
Little reliance on product differentiation,
advertising, pricing strategy

263

Centrally-Planned Capitalism
Economic system in which command

resource allocation is used

extensively in an environment of
private resource ownership
Examples:
Sweden
Japan

264

M arket Socialism
Economic system in which market

allocation policies are permitted

within an overall environment of
state ownership
Examples:
China
India

265

Low -Incom e Countries

GNP per capita of $785 or less
Characteristics
Limited industrialization
High percentage of population involved in

farming
High birth rates
Low literacy rates
Heavy reliance on foreign aid
Political instability and unrest

Of these, only China and India are

BEMs

266

Low er-M iddle-Incom e

Countries
GNP per capita between $786 and

$3,125
Sometimes called less-developed
countries (LDCs)
Characteristics

Early stages of industrialization

Cheap labor markets
Factories supply items such as clothing,

tires, building materials, and packaged

foods

3 BEMs: Poland, Turkey, Indonesia

267

U pper-M iddle-Incom e
Countries
GNP per capita between $3,126 to $9,655
Characteristics
Rapidly industrializing
Rising wages
High rates of literacy and advanced

education
Lower wage costs than advanced countries
Sometimes called newly industrializing
economies (NIEs)
3 BEMs: Argentina, Brazil, Mexico, South Africa
268

H igh-Incom e Countries
GNP per capita above $9,656
Sometimes referred to as post-industrial

countries
Characteristics
Importance of service sector, information

processing and exchange, and intellectual

technology
Knowledge as key strategic resource
Orientation toward the future
269

G roup ofSeven (G -7)

Leaders from these high income countries

work to establish prosperity and ensure

monetary stability
United States
Japan
Germany
France
Britain
Canada
Italy
270

O rganization for Econom ic

Cooperation and D evelopm ent
30 nations each with market-

allocation economic systems

Mission: to enable its members to
achieve the highest sustainable
economic growth and improve the
economic and social well-being of
their populations
271

The Triad
Dominant economic centers of the

world

Japan
Western Europe
United States

Expanded Triad
Pacific Region
North America
European Union
272

The Future
The only certainty about the future

is that it will be uncertain, and

change will occur at an increasing
rate.
It will also be more complex.
Businesses and consumers now
must operate in an era of terrorism
and lack of trust.

O verview ofm arketing

Marketing is one of the functional areas of

Business
Marketing can also be thought of as one of
the activities that, alongwith product design,
manufacturing, and transportation and
logistics comprise a firms Value Chain
Historically, marketing was considered as
just another link in the chain
Today many organisations are emphasising
the effective coordination of marketing with
other functional areas

Boundaryless M arketing
Competitive pressures have prompted many firms to

involve marketers in design, manufacturing, and other

value-related decisions from the start
This approach is known in some circles as boundaryless
Marketing
Rather than linking marketing sequentially with other
activities, the goal is to eliminate the communication
barriers between marketing and other functional areas
Properly implemented boundaryless marketing ensures
that a marketing orientation permeates all value
generating activities in a company
It also gives employees at all levels and in all
departments the opportunity to be involved in marketing
( ex-GE)

Value equation
For any organisation, the essence of

marketing is to surpass competition

at the task of creating perceived
value for customers
The value equation is a guide to this
task:
Value = Benefits/ Price
Marketing mix is integral to this
equation because benefits are a
combination of the product,

Value equation
As a general rule value as perceived by the

customer can be increased in two basic ways

1. Marketers can offer customers an improved
bundle of benefits
2. Or offer lower prices ( or both)
. Marketers may strive improve the product
itself, to design new and improved channels of
distribution, to create better communication
strategies or a combination of all three
. Marketer may also seek to increase value by
finding ways to cut costs and prices